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Benelux Economic Union - A new Role for the Twenty-First Century Walsh, M. Jeremy 2008

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Introduction revocation in 2010. This marks the first time since its signing that the member nations are The Treaty of the Benelux Economic Union in a position to significantly alter its original (BEU) has served as a quintessential example of provisions. The numerous conferences, dis- international integration and collaboration cussions, and meetings that have already taken since its chartering in 1958. A descendant agree- place addressing this issue reflect its critical ment of the Benelux Customs Union of 1944, importance to the Benelux nations. Despite the BEU is a formal organization comprised of the sizable growth and increased effectiveness representatives from the , Luxem- of the BEU in the last five decades, the reality bourg, and . These representatives, is that a larger number of its competencies1 have structured in a hierarchal system of committees been supplanted by the . These and groups, focus upon the coordination of gen- include the Treaty’s two main provisions: the eral economic principles and policy among removal of international border restrictions and the three member nations. The current policies the expansion of a common market within the and issues under the BEU’s purview range from Benelux boundaries. business law to capital investment to the move- The Benelux Economic Union thus finds ment of people and goods. At its heart, the itself at a turning point in its history, as well Union is a catalyst for the Benelux, allowing its member nations to enhance their financial 1In the context of the BEU, “competencies” (or some- and economic standing via intensive cross- times “competences”) refer to policy areas in which the border cooperation. Union has a significant or expert amount of knowledge and experience. Having implemented standardized currency Having run the course of its initial char- rates across the Benelux nations decades before the euro, tering of fifty years, the Treaty establishing for example, it could be said that one of the BEU’s early com- the BEU is scheduled for revision, renewal, or petencies was policy relating to currency standardization.

23 as in the history of its member nations. Prelim- located precariously between the major Euro- inary discussions on behalf of the Benelux coun- pean powers and Germany. tries have revealed that none of their three This location in Europe would lead to governments would like to see the Treaty termi- physical destruction, economic stagnation, and nated. (“The Future of the Benelux Cooperation great loss of life for the Benelux nations through . . . ,” p. 1) The question for the future of the World War I and World War II. It was in reac- organization therefore becomes one of iden- tion to the significant devastation of the latter tity and function. What specific role does this conflict that the first stirrings of the Benelux Union, a well-established entity that coordinates Economic Union emerged. In September 1944, the efforts and policies of three highly developed the exiled governments of the Benelux nations nations, have in a centralizing twenty-first cen- began to construct plans for economic collab- tury Europe? oration and mutual aid. These plans came to In this article I begin with a brief his- fruition in the Benelux Customs Union, a joint tory of the Benelux Economic Union, including entity initially comprised of representatives its original function and how this was affected from the Benelux nations aimed at both eco- by the formation of the European Union. I nomic and political cooperation. Successes in examine the possible avenues of cooperation various economic pursuits in the decade follow- that the BEU may explore in the coming years, ing the war, including the removal of internal depending on the changes to its Treaty in 2010. trade boundaries and the coordination of exter- These include changes to the existing BEU nal tariffs, eventually led to the signing of the infrastructure, extension of the Treaty’s provi- Treaty of the Benelux Economic Union in 1958. sions beyond Benelux borders, and the integra- This Treaty outlined the basic provisions of tion of political cooperation into the Treaty’s the three nations’ joint economic policies, the primary goals. Additionally, I analyze the role main goals of those policies, and how such coor- of the BEU as a “European Laboratory” by delv- dination should be implemented. (Treaty Estab- ing into potential new competencies, including lishing the Benelux Economic Union, p. 2) those pertaining to prominent societal and geo- graphic issues. Current Function of the Benelux Economic Union Brief History of the Benelux In the 50 years since the Treaty’s inception, The three nations comprising the Benelux the Benelux nations, the BEU, and Europe as — Belgium, , and the Nether- a whole have been transformed. In its first lands — have shared close cultural, geographic, decades, the BEU served as a revolutionary and societal ties for hundreds of years. Despite and ground-breaking catalyst for economic inte- differences in political ideology and practice, gration across international borders. Its mem- their history is shaped by these ties, and often ber nations explored the benefit and proper the three have been grouped together into a sin- execution of competencies, including free move- gle conglomerate known as the “Low Coun- ment of people and goods, international bank- tries.” The Kingdoms of the Netherlands and ing and investment, corporate law, and civil Belgium as we see them today were officially rights. So effective was this implementation, and founded in 1839, following centuries of terri- so influential the voice of the Benelux with torial wars between such factions as the Haps- regard to further integration, that many credit burg Empire, the House of Orange, and various the BEU as the precursor of the European Austrian Kingdoms. (Janssen, pp. 3–4) The final Coal and Steel Community. This organization development in the formation of the three would serve as the first step toward integra- nations was in 1890, when Adolf of Nassau tion into the and, finally, assumed the title of Grand Duke of Luxem- the European Union. bourg, a title previously held by the Dutch King. It is because of these initial steps that Thus with the turn of the twentieth century many throughout Europe came to regard the came the emergence of three geographically Benelux and the BEU as the “Laboratory of small but culturally distinct nation-states, Europe” mentioned earlier. The title refers to 24 the three nations’ economic and social coop- the Union itself and delegating tasks and assign- eration during the mid to late twentieth cen- ments to the other BEU committees. It fur- tury. The “experimentation” by the BEU in the ther works to establish collaborative policies areas of economics and international discussion without committing any Benelux nations to spe- during that time period proved that an unprece- cific action prior to obtaining the assent of their dented level of collaboration was both possible governments. (Treaty Establishing the Benelux and could be highly successful. Seeing the Economic Union, pp. 5–6) BEU put theory into effective action in the 1950s In addition to the various subcommit- and ’60s further eased the later transition of tees and delegations established on an ad hoc Europe from isolated nations into the mod- basis, the four main constituent committees ern-day EU. Benelux diplomats now argue that of the BEU are the Council of the Economic the BEU’s current infrastructure and high Union, the General Secretariat, the Council of level of development mean that its laboratory Justice, and the Office of Intellectual Property. role could continue into new areas of experi- The first of these is the most prominent within mentation. These would include new competen- the original Treaty’s framework. It is essentially cies not yet fully addressed by the EU, such as second-in-command to the Committee of Min- land use, pollution policy, and energy use, isters, oversees the activities of any economic among others. ad hoc committee, and issues the directives that One of the biggest issues facing the cur- actually drive BEU action. The General Secre- rent Benelux Economic Union is that its very tariat serves as the administrative and logis- success has led to most of its functions being tics network for the BEU, connecting together transferred to the higher European level. As its member nations, diplomats, and various originally defined, the Treaty’s provisions deal committees. The Council of Justice is an inter- almost exclusively with joint economic policy. national dispute-settling forum in which citi- The majority of those policies have been adopted zens, groups, or government entities may file by the European Union, resulting in the sup- complaints and appeals with the Council in planting of much of the BEU’s purpose during the interest of receiving fair judgment. Lastly, the last decade. The European Commission the Office of Intellectual Property is a body Treaty expressly recognizes the Benelux Eco- that seeks to make trademark and copyright nomic Union as a formal entity within the EU protection uniform throughout the whole of the through Article 306. However, it also restricts Benelux. (Treaty Establishing the Benelux . . . , the application of present-day BEU policy to pp. 2–13) It is through the evolution of these those issues not covered by the EU. (Wouters committees and the creation of new ones that and Vidal, pp. 5–7) The current functions of the the BEU has the greatest potential to redefine BEU are, therefore, in need of greater expansion its role within the European Union by 2010. beyond their original economic purpose. The primary means of achieving this expansion is Revisions of the Treaty two-fold: the adaptation of the Treaty’s goals and provisions, and their implementation through The first of the issues on the table for the existing BEU framework discussed below. the renewal of the Treaty is a restructuring and refocusing of its inner workings. Any new Current Form of the Benelux provisions added to the Treaty itself will serve as Economic Union the foundation for the remainder of the changes that the BEU may put into place in 2010. The The Benelux Economic Union, as laid most likely updates to the Treaty will there- out in the original Treaty, is a structure made fore take two forms: the revision or removal of up of committees and subcommittees devoted its existing provisions, and the development of to its various functions. At the head of the additions that reflect the BEU’s new functions. BEU is the Committee of Ministers, a corpo- (“Benelux Revisited,” p. 11) The reasoning rate body comprised of at least three delegates behind the former set of expected changes is from each member nation. The purposes of this simply due to the outsourcing of the BEU’s orig- Committee include directing the initiatives of inal core competencies. Since so many of its 25 current policies are now within the purview of beyond the BEU border, and an increase in its the EU, it makes sense either to update cer- role in facilitating the new competencies to be tain articles to reflect this change in jurisdic- explored by the BEU following 2010. tion or to remove those articles altogether. The most recent example of the General Examples of articles that are most likely to expe- Secretariat’s crossing of the Benelux border was rience change actually include some of the most its serving as the Secretariat of the Schengen revolutionary at the time of the BEU’s inception, Treaty drafted in 1985. (Hitzberger, pp. 29–30) such as Articles II, III, and V. Taken together, This Treaty served as one of the cornerstones these articles provided for the free movement of of the modern EU framework by implementing people, goods, and services across the Benelux the first large-scale increase in border-crossing nations’ borders. Other less important articles freedom throughout the European continent. Its have also been supplanted by the EU, includ- provisions included the use of a “Schengen Visa” ing Articles XII through XIV relating to the to facilitate the movement of people, as well as use of standardized currency exchange rates. the beginning of EU international police coordi- (Treaty Establishing the Benelux . . . , pp. 2–4) nation. The administrative support offered by the These became obsolete with the inception of the Benelux General Secretariat during these discus- euro currency more than a decade ago. sions was similar to that which it offers to the While the above articles are those most Benelux nations during normal operations. This likely to undergo revisions due to obsolescence, consisted of maintaining contacts and com- others may be reworked simply because they munications networks, facilitating meetings and have diminished in relevance since 1958. One scheduling, and the logistical organization of the such example includes the reworking of Articles negotiations and talks that led to the completion XXVIII and XXIX of the original Treaty. (Wouters of the Treaty. and Vidal, p. 24) These articles outline the for- The success experienced by the General mation of many committees and subcommittees Secretariat at such a watershed in the EU’s yet to be formally established at the time of development has inspired some Benelux diplo- the Treaty’s signing. The list of these commit- mats to suggest that this may be a possible tees includes those pertaining to foreign rela- avenue to greater BEU functionality in present- tions, industry and trade, organization of statis- day Europe. The fact of the matter is that the tics, and the monitoring of agriculture and food. BEU General Secretariat, operating on a com- Their competencies have since been assumed by paratively small budget, represents one of the other organizations within the BEU frame- most well-established organizations in Europe work or are on the table to be formally reworked devoted exclusively to moderating international in the new BEU Treaty. In addition to their irrel- discussion and policy creation. (Hitzberger, evance in current BEU dealings, these articles’ p. 42) This begs the question — does this work length and degree of detail also contribute to of moderation, backed by the Benelux’s com- the likelihood of their removal. bined assets and high reputation, make for a realistic role that the Union can play in the Expanding the General Secretariat future? More importantly, would this type of work violate the current EC Treaty that restricts In addition to the written changes to be the jurisdiction of the BEU to within its own made to the Treaty itself, another aspect of the borders? Supporters of the General Secretariat’s changes to be made to the BEU infrastructure possibly expanded role say that such would be pertains to the growth of its organizational acceptable so long as the organization’s work limits and jurisdictions. The most likely candi- would expedite and focus, rather than supplant, dates for this reworking are first the General Sec- the discussions taking place across the grander retariat, followed by possible changes to be made scale of the EU. (“Benelux Revisited,” p. 11) to the Benelux Court of Justice. The arguments Opponents to this type of expansion for the changes to the General Secretariat are respond that the proposed continent-wide role contingent upon its previous success in areas not of the BEU General Secretariat clearly explicitly provided for in the current BEU Treaty. encroaches upon an existing EU competency. These include the extension of its functionality The Secretariat-General of the European Com- 26 mission, for example, is a 600-member organ- EU. By serving as an informal international ization that performs much the same role by arbiter, the Court of Justice would offer itself aiding in the day-to-day functionality of the primarily as a moderator for other groups of EU and maintaining its communications net- nations seeking to collaborate in a political form work. (Secretariat-General of the European like the Benelux. This would enhance the BEU’s Commission) Additionally, the body works to continued non-economic function within guarantee the correct upholding of EU law Europe while also introducing its role as the lab- and supports the Commission’s proposals before oratory of Europe. (“The Future of the Benelux the rest of the EU. Would it be possible, how- Cooperation . . . ,” p. 8) Specifically, this would ever, for the BEU General Secretariat to serve as allow the Benelux to share its collaborative a supplement, a second-in-command, in those efforts in legal disputes and political negotiation cases where the BEU is known to specialize? with those countries “newer” to the system. Examples of such cases could include conflicts Examples include the Visegard (Poland, Czech related to regions with developing nations or Republic, Slovakia, Hungary) and Baltic (Esto- those areas into which the BEU is seeking to nia, Latvia, Lithuania) regions of Europe. expand its competencies in the future. In addition to expanding its role into a Benelux Political Union larger EU context, the General Secretariat may also change by extending its functionality into It is well documented that the original new proposed competencies to be added to the framers of the Benelux Customs Union envi- 2010 BEU Treaty. The success of these compe- sioned a two-sided collaboration. (“The Future tencies, including coordinated energy use, envi- of the Benelux Cooperation . . . ,” pp. 6–7) On ronmental issues, and the possible expansion the one hand, the efforts of this Union would be of the Benelux’s goals outside its own borders, devoted to discussing and coordinating eco- will be contingent upon the BEU being able to nomic policies among the three nations. The capitalize on its existing strengths. Facilitating second part of this coordination, however, was international discussion, for example, is one of to be political in nature. In order to ensure that the key competencies of the Benelux, and it the voices of the Benelux nations were heard will only increase in importance with the pos- in a diplomatically-strained post-war Europe, sible shift of the Treaty’s focus from economic the founders of the Union sought to establish issues to societal and geopolitical ones. As a strong foundation of political commonality such, the movement of the General Secretariat among them. At their most optimistic level, they into these areas will be of the utmost urgency initially formed a customs union that would if the newly proposed scale of the Benelux is to coordinate economic, social, and, to a lesser come into effect. (Janssen, pp. 43–45) extent, political policy creation. This customs union, though, gradually became the economic Expanding the Court of Justice union which developed into the foundations of the BEU (“Benelux Revisited,” p. 4) The other specific organization that may Despite the vision of the Benelux founders be part of the expansion of the BEU into EU in the early to mid 1940s, those initial ambitions dealings is the Benelux Court of Justice. This were not realized. The formal political cooper- organization is an extension of the College of ation of the Benelux Customs Union was ini- Arbitrators laid out in the original Treaty. tially very hopeful; for example, following WWII (Treaty Establishing the Benelux . . . , pp. 10–12) the three member states sent only one collec- It serves as a moderator of international disputes tive delegation to discuss the implementation among both the citizenry and states of the three of the Marshall Plan. (Janssen, pp. 35–36) A loss Benelux member nations. This ability to provide of political will and comparatively greater suc- judgment and rulings on multiple levels of cess in economic discussions eventually led to grievances — from the individual to the inter- the dropping of the official political aspect of the governmental level — is the feature of this Union entirely by the end of the 1950s. The Court that members of the Benelux community removal of customs duties and trade quotas, feel would be most beneficial to the whole of the founding of the General Secretariat, establish- 27 ment of a common Benelux tariff, and coordi- ties to the new BEU Treaty’s policies. Even nation of mutual trade policy during this time early discussions on the matter, though, have shaped the beginnings of the modern-day BEU. revealed the aversion of the Benelux nations to The changes that have taken place any type of mandatory political cooperation. That throughout Europe since that time have caused being the case, supporters of this change have an equally distinct change in the political inter- proposed that formalized political cooperation action of the Benelux nations on the Euro- not be compulsory but rather an open option pean level. The most obvious example of this to be utilized when appropriate. They argue that is the region’s behavior in proposing memo- placing a formal political policy in the Treaty randa and voting within the European Union. would establish regular meeting times regard- Although it cannot be guaranteed, the three less of EU activity, increase the cohesiveness of nations will frequently vote the same way in EU the Benelux governments, and tie together their decisions so as to maximize the effectiveness mutual understanding of the issues at hand. of their collective 29 votes. (Hitzberger, pp. (“The Future of the Benelux Cooperation . . . ,” 48–49) This number gives the three nations p. 7) Additionally, the organizer for this height- identical voting power to that of a single “major” ened level of collaboration would be the General nation, such as France, Germany, , or the Secretariat, serving to aid in networking and United Kingdom. Other geographic regions facilitating discussion. within the European Union, such as the Paradoxically, the most significant barrier Visegard countries, have actually requested to to this political cooperation is a situation that sit in on Benelux political discussions in order also serves as one of the main motivations for to improve their own ability to compromise and implementing it. Throughout the life of the form a consistent voting bloc. (“Benelux Revis- BEU, a significant political divide has existed ited,” pp. 6–9) between Belgium and the Netherlands on var- In terms of issuing joint memoranda, ious issues. These have ranged from interna- the Benelux nations have addressed the Euro- tional disputes to the settling of inter-European pean community with recommendations and affairs to the overall structure of the EU’s organ- advice for well over fifty years. One of the most izations. This divide between the two nations prominent examples of this includes the 1955 has resulted in more than fifty years of frequent memorandum to the European Coal and Steel political disagreement despite effective eco- Community. The message reinforced the impor- nomic collaboration. The Benelux bloc vote in tance of encouraging European economic inte- the EU, although a useful tool, thus some- gration during the second half of the twenti- times comes at a very high price in negotiat- eth century, specifically in the areas of nuclear ing time and effort by the two nations. Among power, cross-border trade, and open-market the most recent examples of dissention was considerations. (Benelux Memorandum . . . , the issue of large-scale immigration facing the 1955) This memorandum is now credited with whole of Europe. In a poll taken in 1994, Bel- contributing to the formation of the European gians were found to be more xenophobic, both Economic Committee (EEC) in 1957. More culturally and politically, than their Dutch recently, the Benelux nations released a mem- counterparts. (Eatwell, p. 47) By placing a struc- orandum in 2004 describing their views on tured political system within the BEU Treaty, the the future of an enlarging and seemingly less goal would be to promote mutual understand- effective EU. (Benelux Memorandum . . . , 2004) ing on disagreements such as this through an Despite the informality of the Benelux increase in meetings and overall communica- political cooperation in the last four decades, it tion. (Janssen, pp. 46–47) An improvement in is clear that the three nations engage in a signif- the political relationship between the Nether- icant amount of discussion and coordination on lands and Belgium only enhances the region’s a regular basis. This existing system of collabo- ability to function effectively, especially given ration, taking the form of meetings by delegates the other proposed expansions and changes to prior to EU votes or debates, is the reason why the BEU in 2010. In short, if the Benelux nations some members of the Benelux community seek the most influential BEU role possible in have suggested including formalized political the greater European Union, a commitment 28 to this type of formal political unity may be Support for this expansion of the BEU’s newly absolutely necessary. proposed policies into this German territory has been offered from a significant number of Benelux Plus Benelux diplomats, including the Prime Min- ister of Luxembourg. (Wouters and Vidal, p. 26) Another possibility for extension of the The purpose of this policy is not wholly eco- BEU Treaty is to adapt it to include regions that nomic in its benefits, but would utilize cross- are geographically adjacent to the Benelux border cooperation for the optimal use of nat- nations in a plan referred to as “Benelux Plus.” ural resources and the environment as stated The reasoning behind the “Benelux Plus” pro- above. Using joint efforts to coordinate power posal is that it will serve as another area for distribution, land use, and pollution control the BEU to move beyond its current provisions, makes practical sense not just within a single the vast majority of which are solely economic nation’s boundaries but across national bound- in nature. Since the EU has rendered many of aries and in adjacent regions. these economic functions moot, possible out- The main problem associated with this lets for the BEU to expand its competencies possible expansion of the BEU Treaty derives include issues arising not from trade or goods, from the EC Treaty provision that defines the but from location. These are problems relat- existence of the BEU organization within ing to the very space that the Benelux nations twenty-first century Europe. Article 306 of the and their people occupy, involving constraints latter Treaty expressly outlines the limitations such as land use, energy use, environmental of the BEU’s jurisdiction. Although the BEU may sustainability, pollution, and climate change. implement policy that is not presently addressed (“The Future of the Benelux Cooperation by EU precedent or in which the BEU is “more . . . ,” p. 6) The solutions to these issues require advanced” than that precedent, the BEU pol- the economic understanding of the BEU. They icy may only be applied to its original member also, however, require that the BEU broaden nations. Thus, even if the addition of the its set of goals to include social concerns that “Benelux Plus” proposal were to be made to are of growing importance within the EU. the BEU Treaty during its revision, in theory The title “Benelux Plus” demonstrates the innovations could not be put into practice with- ultimate objective that this proposal hopes to out violating Article 306 of the EC Treaty. accomplish: the extension of “local issue” pol- A possible solution would be to take advan- icy coordination throughout the Benelux and tage of a less formal partnership among the outside the Benelux. The effects of this exten- regions in question. This would be accom- sion would be two-fold. First, it would serve as plished by utilizing German law that allows a prime example of action-oriented, cross- the nation’s various states to form “neighbor border cooperation on prominent global issues. relationships” with adjacent nations or coun- (Hitzberger, p. 46) This is exactly the type of ties. (Wouters and Vidal, pp. 25–27) This law achievement that would benefit the BEU in would allow the BEU and North Rhine-West- defining its role within the modern-day EU. The phalia to form an unofficial commission devoted achievement would display those key points that to implementing the “Benelux Plus” agenda. give the BEU its reputation today — advanced In this case, the change to be made to the BEU thinking, collaboration, and work toward effec- Treaty would not have to allow for a formal tive execution. Secondly, this extension would extension of its provisions to a non-Benelux allow the BEU to once again serve as an EU region. Instead, it would allow for the accept- laboratory, but would involve its neighboring ance of German law as a basis for cooperation regions in the experimentation. with geographically neighboring regions. Arti- One of the most likely candidates to cle 306 would remain inviolate, and the become a member of this “Benelux Plus” agree- “Benelux Plus” policies could be organized with ment is the German region of North Rhine- North Rhine-Westphalia. Should this agreement Westphalia. This is due to its geographic loca- come to pass, it may then serve as the legal tion, touching both the Netherlands to the precedent for similar agreements with the other Northwest and Belgium to the West. (Figure 1) regions surrounding the Benelux. 29 Figure 1 North Rhine-Westphalia as a “Benelux Plus” Member

Source: European Chemical Regions Network.

Benelux into the Future be one that adapts its work to fit inside that of the EU. Coordinated economic policy, the fun- As the Benelux Economic Union damental basis for its creation, must now be approaches its 50th anniversary and the sched- supplanted by projects and efforts that the uled end of its founding Treaty, it is clear that rest of Europe has not yet implemented or done its members face both a distinct challenge and successfully. As Europe struggles with fuel costs, a distinct opportunity. The economic effec- immigration issues, and increasing population tiveness of the BEU and the precedents it has set density, for example, new possible areas of com- serve as more than enough motivation for the petency include energy generation, cross-bor- member nations to push for its continuation. der police cooperation, and land control. In The difficulty comes, however, in choosing what order to be able to successfully handle these new direction this entity should now move in competencies, it is also absolutely necessary that twenty-first century Europe. Its influence on the the BEU enhance and expand its own operat- developing European Union has resulted in its ing capabilities and committees. And finally, own obsolescence within the last twenty years. with that internal expansion, the organization The simple answer is that, in 2010, the BEU del- should also work to establish itself in a politi- egates should use their diplomatic experience, cal advising role throughout the EU, utilizing strong structure and foundation, and consid- the BEU’s experience in diplomatic affairs and erable assets to begin exploring new avenues cross-border policy to aid other nations seeking and competencies. The question then becomes: the same goals. The members of the Benelux what competencies and avenues should those have a unique chance before them to perpetu- be? ate their influential work in Europe. With Even today, Europe continues to experi- proper restructuring of the BEU, they will ence centralization through the development of continue to play an important role in 2010 the EU; this indicates that an effective BEU must and beyond. 30 REFERENCES

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